Mediation can be better than litigation

Alternative dispute resolution will often make more sense for charities than a day in court, says Robert Nieri

Robert Nieri

A dispute can arise within a charity. Trustees might disagree or some members challenge the board. Like any other buyers and providers of goods and services, charities can sometimes find themselves in dispute with third parties.

Litigation can be costly, nasty, brutish and long, and in the past decade alternative dispute resolution has become more widespread. It takes various forms, such as early neutral evaluation by an experienced lawyer, determination by a qualified person and, in particular, mediation.

Mediation is a negotiation between parties that is facilitated by an independent, impartial mediator who does not attempt to decide who is right, but seeks to find a win-win solution that is acceptable to all parties. But if charities consider they have a strong case, aren’t trustees duty bound to pursue litigation in the best interests of their charity to preserve and recover its assets? Not if, on a risk and benefit analysis, a settlement through mediation looks more attractive.

If a disgruntled relative challenges a legacy left to your charity by his Great Aunt Matilda and you’re advised that his claim might succeed, as a trustee you’ll need to consider how much could be at stake from prolonged litigation - not only in terms of legal cost, but also of management time spent dealing with it and any adverse publicity that might follow. Perhaps it would be better to engage in a mediation process to see if an early resolution can be achieved?

How does mediation work? The parties will agree on a mediator and usually split the cost, which could be between £1,500 and £3,000 for a full day. It’s not cheap, but where a dispute is worth a lot more it could be money well spent.

Then the parties will plan for the day, agreeing a bundle of documents for the mediator to consider in advance. They will also prepare a position statement that sets out their interests, aims and objectives, which is sent to the mediator and to the other party.

On the day, each side will make their opening statement, which is also an opportunity for the client - not only the lawyer - to explain the case from their own perspective. Opening statements should set a constructive, collaborative tone for the rest of the mediation.

Then the parties will tend to go into separate rooms and the mediator will spend time with each, engaging in shuttle diplomacy to identify and develop common ground. All discussions and documents during the process are treated as confidential and ‘without prejudice’.

What if the other side won’t mediate? You cannot force them: it’s a voluntary process, but one that the courts are keen to encourage so claims are disposed of quickly and at the lowest cost. If you unreasonably refuse to mediate and the case goes to court, you may not be awarded some or most of your legal costs.

The mediator will focus your mind on the weaknesses in your case as well the strengths of your opponent’s position. In litigation, where months can pass between one court appearance and another and before the full hearing, litigants can end up with a siege mentality or with a conviction in the strength of their own position that isn’t questioned seriously until the case gets to trial.

What are the benefits of mediation over litigation? Usually it’s cheaper and quicker, and there is more scope to achieve a workable solution for all. So one party could make a statement or offer to do something completely unconnected with the matter in dispute, whereas a judge is constrained to do what is legally required in the circumstances - usually to award damages or to require a party to do something strictly concerned with the dispute.

The process can be cathartic: perhaps a client just wanted to vent his frustration and have his say. Both parties can come away with something, whereas in court it’s 'winner takes all' and often even the winner doesn’t feel it’s been a victory, especially if the opponent folds.

Even if mediation concludes with no resolution, it often paves the way to an early resolution soon afterwards.

Sometimes there will be cases that turn on a point of principle that needs to be upheld, or where the parties could never resolve their differences and need a judgement imposed, but this does not happen often. Always consider mediation as an option.

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